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MD AG Frosh Announces Settlement

May 18th, 2015 by WCBC Radio

Attorney General Brian E. Frosh today announced a settlement with two Connecticut-based home warranty companies resolving allegations that they solicited water-line protection coverage by falsely implying the businesses were acting on behalf of municipal governments, among other alleged violations of the Consumer Protection Act.

The companies, called HomeServe, allegedly sent solicitations to Marylanders that appeared to be from municipalities or public utilities, encouraging consumers to purchase coverage protecting against damage or failure to residential water service lines. At the time of the advertisements, however, the companies were not affiliated with the governments or utilities named in the ads.

Under the settlement, reached by the Office of the Attorney General Consumer Protection Division, HomeServe will pay restitution to former customers who indicate they were misled by the ads. Consumers who did not renew their service plans after their first year and who believe they were misled are eligible to receive a full refund of their premiums.

“Consumers were tricked into signing up for coverage they might not have needed because of ads looked like they came from a local government or were endorsed by a government,” said Attorney General Frosh. “Businesses must be truthful in their advertisements and cannot misrepresent their status or affiliations.”

The Division also alleged that HomeServe illegally required consumers to release it from liability for damages it caused during repairs, provided only 11 months of coverage under its “annual service” offer, and exaggerated the scope of its coverage by claiming “any” or “all” problems would be covered when, in fact, the home warranties contained numerous exclusions from coverage.

Under the settlement, current customers who purchased service plans when the company was making its deceptive “annual service” claim will receive one free month of coverage. HomeServe, which has previously entered into settlements with other states for similar misrepresentations, will pay the Division $115,000.

The settlement further prohibits HomeServe from misrepresenting its affiliation with any municipality, government entity or public utility, unless such a relationship actually exists. In 2014, after changing its advertisements, the company partnered with the City of Baltimore and has since enrolled 23,000 residents into its water line coverage plans.

The agreement also requires any offer of annual coverage to last for 12 months, prohibits the company from requiring consumers to sign releases in order to claim covered repairs, and prohibits the use of terms, such as “any” or “all,” when selling plans that have exclusions to coverage.

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